Nov 26, 2008

Business - Blockbuster eyes Netflix with MediaPoint player

Jennifer LeClaire

Blockbuster is finally making an aggressive move against Netflix. The perennial movie-rental chain has partnered with 2Wire to launch the 2Wire MediaPoint digital-media player. It's Blockbuster's version of an on-demand video solution that gives movie watchers instant access to Blockbuster OnDemand content through their television sets.

Blockbuster is pulling out all the marketing stops to gain traction in the marketplace. The MediaPoint digital-media player is available free with the advance rental of 25 Blockbuster OnDemand movies for $99. After the initial 25 rentals, movies are available for as little as $1.99 each. The players will begin shipping in time for the holiday season.

"The MediaPoint digital player, featuring Blockbuster OnDemand, is entertainment made easy. We are bringing Blockbuster, and the thousands of movies in our digital library, straight to customers' televisions," said Jim Keyes, Blockbuster's chairman and CEO. "The player is simple to use, delivers DVD-quality video, and there's no monthly subscription commitment."

No Subscription Attached

As Keyes stated, there is no monthly subscription commitment -- an important consideration, considering that Netflix does charge a monthly fee for movie rentals. Blockbuster is also touting newer movie releases than its competitors, making some titles available within weeks after they stop showing in theaters.

"Blockbuster's offer looks like a marginally better deal than what Netflix offers," said Phil Leigh, senior analyst at Inside Digital Media. "If you subscribe to 25 movies you get the box for free, whereas at Netflix you have to buy the Roku box for $100. At the same time, Blockbuster doesn't tell you exactly when they are going to ship it, other than to say before Christmas."

While the uncertain ship date may cause some would-be buyers to hold on to their money -- or spend it somewhere else -- this holiday season, 2Wire does have a solid track record in the industry. Leigh said if MediaPoint works well, it will give Blockbuster a strong competitive offering against Netflix.

"This is something Netflix is going to want to respond to if they can," Leigh said. "It's a question of who's going to have more influence with the studios."

MediaPoint's Performance Promises

The MediaPoint digital-media player is about the size of two boxes of movie candy, and Blockbuster promises that it's easy to install and works with any broadband connection -- either wirelessly via built-in Wi-Fi or wired via Ethernet cable -- to deliver new movies, classics, foreign films and television shows from the Blockbuster digital library.

MediaPoint offers fast-forward, rewind and pause capabilities, and a viewing experience in DVD quality no matter the speed of your broadband connection. Movies can be played right away or saved to watch later. What's more, the player supports HD video content and can be connected to HDTVs.

Still, Blockbuster is coming late to the set-top box market. Netflix has the early-mover advantage, which includes relationships with TiVo and Xbox. Netflix has also been staffing its senior ranks with the specific objective of offering its on-demand service to other partners. Leigh expects Netflix to move aggressively to strike deals with makers of consumer-electronics appliances, such as Blu-ray players.

"I don't think this is going to rain on Netflix's parade because the company is vigorous about offering its service elsewhere besides the Roku, and I don't see that same aggressiveness from Blockbuster," Leigh said. "This will not destroy Netflix, but Blockbuster could be competitive with MediaPoint."